RF's Financial News

Sunday, January 29, 2012

“Money for Nothing, and the Chicks…” … Dire StraitsEvery once in a while we get something right, and knock on wood, since Dec 1, we're on a roll and up over 21% in the New Year! We’ve gotten the January effect as we suggested and this week we received more ‘easing’ from The Ben Bernanke. Remember, Obama's running for office again, and since the true economy is on life support, one thing The Ben Bernanke can do is manipulate the markets in his favor. The Ben Bernanke will be removed from office if ANY Republican candidate is elected. So you have Obama needing a strong market that he can point to, and you have The Ben Bernanke willing to do the work necessary to create an up market because his job is on the line.

Well, this week, the Federal Open Market Committee (FOMC) finished up a two-day meeting where they were discussing what monetary policy to implement to help the economy strengthen. At noon we got the results of that meeting, and there were two interesting observations. One was that the economy is improving – but not at the speed that they would like; therefore, they are going to extend the amount of time that they're keeping interest rates "extraordinarily" low, from mid-2013 to late-2014 – which is incredible to me. The Ben Bernanke already lowered interest rates to the point where overnight lending rates are 0 - 0.25% to the banks. So, since he can't go lower than 0%, all he can do is extend the time line. He did just that, and basically said to the banks: "You guys get ‘Money for Nothing’ for 3 more years" – and banks love free money. Secondly the number of "dissenting" voters fell to 1. In other words, at these meetings, The Ben Bernanke is the chairman and all the invitees from the 12 member banks get to vote on the decisions. In October/Nov the number of dissenting voters was 3, and now it’s down to 1 – and that ‘one’ just didn’t agree with the timeline. So basically ALL the member banks are “ALL IN” for more Quantitative Easing.

But people are becoming wiser, and people know inherently that printing money is "bad" so instead; The Ben Bernanke talks about other elements such as buying up Mortgaged Backed Assets (MBA’s), and other "unconventional" schemes. Guess what? In order to buy back MBA's, it takes money. And the only way The Ben Bernanke can come up with any money is to print it! Call it what ever you want, the solution to The Ben Bernanke forever comes down to printing money out of thin air.

Let us not forget that this is the man that told Congress (in 2005) on the question of a speculative housing bubble resulting from cheap credit said: “These price increases largely reflect strong economic fundamentals." No Ben, these were liars loans, paid off credit ratings agencies, bribed appraisers, and bucket shops churning mortgages for fees – and you didn’t see that, right? This is the man that said: "There is absolutely no danger of a banking emergency" – just months before the Lehman Brothers collapse? What about in 2007, as the market started to turn, Ben told Congress: “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system." Again we are talking about the man in charge of our entire economic policy. In January of 2008, two months before the nationalization of GSE’s Fannie Mae and Freddie Mac, Ben said: "Fannie and Freddie will make it through the storm." And for the worst Pinocchio moment of his life Ben chose June of 2009 when he said: "The Federal Reserve will not monetize the debt." Now, I’ll stop here because my point is that Ben is NOT a stupid man, just a liar – and there’s a big difference. The real reasons for keeping monetary policy at 0% for the next 3 years have nothing do with the housing industry, unemployment, or manufacturing. Not long ago, The Ben Bernanke announced a trillion dollar "swap" arrangement with the European Central Bank (ECB). Greece, Italy, Spain, Ireland and Portugal are broke, and it’s against the law for the ECB to lend directly to "Sovereign Governments". So, The Ben Bernanke, and Turbo Tax Geithner dreamed up this swap arrangement. The ECB borrows money at virtually nothing from the U.S., and lends it to the European Banks for 1%. The European Banks then lend to sovereign Governments by purchasing high-yielding bonds from the countries for 7%. That keeps Italy from crying default, and puts a nice hefty gain on the bank’s ledger. So The Ben Bernanke doesn’t care about unemployment, housing, savings accounts, and inflation – he really cares about his banking buddies in Europe. By the way, Who’s on the hook for those loans to Greece, Italy, Spain, Ireland and Portugal? Well, the U.S. / we are!

As a market measure for this maneuver you need to look no further than the reaction in Gold. Gold was $1,650 per ounce the day before the announcement, and two days later it is $1,740 per ounce. When fiat currencies fall – gold rises.

Also, there are rumors that India and Iran have completed steps to trade Iranian oil for gold, NOT going thru dollars first. This is a BIG deal, and we’re seeing a lot more ‘deals’ where the U.S. dollar is being circumvented. China and Iran are dealing directly in Yuans, while Russia and Iran deal in Rubles. As the true value of the dollar decreases, people are clamoring to get away from it as the world currency.

We see more sabre rattling concerning Iran. The elites want desperately for Iran to throw the first punch, so we can rush in and bomb them. This is pretty high stakes poker we’re playing here. We’ve put dozens of “sanctions” on Iran, trying to force them into giving up any (and all) nuclear ambitions. Now Iran is threatening to stop selling oil to Europe. If this comes to be, energy prices in Europe will spike, further weakening a very fragile, European economic situation.

The Market:What happens when you promise "Free Money for 3 Years?" Well, the market loves it, and the banks (financials) get to use all that low cost money and make a fortune; because a part of what they do is to go speculate in the markets. But, I tend to think that there's even more to come. What the media will call QE3, is still in the wings, and it's my guess they will unleash it in March. We’re honestly on a path that’s impossible. All the central banks around the world have expanded their balance sheets to insane sizes, and the only way to keep it together is to continue to print money. In the past, civilizations that have "printed" money have fallen in disgrace, completely bankrupt. This time it's the entire world that's swimming in an excess of printed money. In reality, no one knows exactly how this will all shake out, but look at Gold and Silver. They are rising now that Central banks are buying it instead of selling it, and we’re hearing more and more of Gold being used as a currency. If that is the case, then Gold is destined to go higher. My estimate from 10 years ago was that Gold would ultimately see $2,400 dollars. I still believe that, and I see Silver hitting $70 as well. My point is, as they play more and more games with the fiat money, trying to prop up an entire globe swimming in debt, there's really very few other choices for a stable ‘currency’.

The perpetual manipulation of the precious metals will certainly continue. The JPM’s and other big guys naked short these (especially Silver) at will. In fact, we could see some weakness on Monday, since they generally have a habit of beating on it around options expiration. So, if Monday holds strong and into Tuesday, then something odd is going on and maybe (just maybe) the JPM's of the world are backing away for a while. We'll see.

In stock land, the "good news" from Bernanke didn't last long, and that was to be expected. The market was in a jungle of technical nightmares, from overbought stochastics, to double tops that have held since July. So, while they loved the idea of an extension of free money, they didn't get a true stimulus shock, and they decided to take more profits.

For a couple of reasons, I tend to think we're going to remain soggy for another week or so. First, while extending free money to 3 years instead of 2 is a good thing to bankers, there was no immediate injection of cash. They wanted the instantaneous printing of stimulus money, and they didn't get it; therefore, they may pout a bit and take some profits. Secondly, there is a huge bond auction coming on Feb 9. Recently people have been selling bonds and sticking their toes in the stock market waters. If they have an auction and no one shows – then rates will have to rise and The Ben Bernanke just said that’s a ‘No-No’. So, I could see the bankers taking the market down some in order to purchase more bonds. The big banks would borrow from The Ben Bernanke and then instantly use that cash to buy Government bonds. So, if the big institutions swing from using their "free money" to speculate in stocks, and instead use it to buy up bonds, I can see the market not getting the volumes it needs to swing higher.

Tips:We had some really spectacular gains lately, as we leaned long at the right times. This week we sold STX for an 11% gain in two weeks, FWLT for a 15% gain in two weeks, CLF $4 dollars per share, TMO for $3.50. So, we really cannot complain at all, and are having a very good start to the year. Now I think it's time to be a bit cautious. I could be wrong and they run this puppy, but...I'm not convinced yet.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, January 22, 2012

Here’s a news blurb that I found somewhat startling – “The average time a U.S. stock is held increased last year from 20 seconds to 22 seconds.” According to Michael Hudson, “It's a shorter time frame than even the average foreign currency trade, which is now 30 seconds. It's all about computers (with high-frequency trading) making up 70% of all volume.”

The trading day is 6.5 hours long, or 390 minutes long, or 23,400 seconds long. And if the average hold time is 22 seconds, one stock is changing hands 1,062 times in a day. Now multiply that by all the stocks. Last year $38 Billion was removed from mutual funds and stock funds as people moved to gold, silver, bonds, and spending money. So, if you take out all that money, and then add in the idea that 70% of all volume is high frequency trading lasting about 20 seconds – Is anyone really buying or selling stocks anymore? It sure doesn't seem like it!

Obviously it’s not humans doing these trades, but rather computers. And with this it’s not the ‘attitudes of millions of investors’ that are moving markets, but rather the high frequency computers that are moving markets. For example: didn’t it bother anyone (last week) that Goldman Sachs missed their revenue projections by 30% last quarter but the stock went UP $6. Didn’t it bother anyone that the International Monetary Fund (IMF) is looking to borrow another $1 Trillion (because the first half trillion might not be enough) and our market went UP for the week? Now, I’m not advocating buying and selling 22 seconds later (like Wall Street has morphed into), but ‘active management’ is the only way to play in this market today.

What if you can’t manipulate your funds all that quickly? What if your funds are a part of a 401K or other structure that doesn’t allow for daily or even monthly manipulations? That ‘absolutely’ will require a more ‘macro’ view of the economy. If you have a broad enough ‘fund family’, potentially you can find a gold, silver, precious metals fund – but let’s assume your fund family isn’t that broad. Our ‘down the road’ view is that The Ben Bernanke is going to unleash QE4/3. (I say QE4 because QE3 was the U.S. loaning the European Central Bank (ECB) half a trillion dollars.) The Ben Bernanke will do QE4/3 because Obama is in the fight of his life to remain President. Obama needs an "up" market so he can take credit. The Ben Bernanke would be fired the day a Republican got in office. Therefore, The Ben Bernanke will do what ever Obama wants.

And this week (I digress) Obama wanted to veto the "Keystone Pipeline" bill. It would have been an opportunity to ship good oil and gas from a friendly nation down to our Texas refineries. It would have employed (some estimates show) 20,000 workers. It would put everyone from construction to chemical operators to work. But much worse was a quote Obama used to justify his veto: "However many jobs might be generated by a Keystone pipeline, they're going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance." Huh? I know 6th graders that would construct an argument better than that. Somehow giving couch potatoes 150 weeks of unemployment payments creates more jobs than a 2 thousand mile construction job and the entire product that would be delivered, refined, and shipped. If you're a Democrat (and you love this guy), this even has to leave you scratching your head.

In any event (concerning your 401K), I truly believe massive stimulus is on the way. Stocks should go up, and so should gold and silver. Of course the U.S. can't afford the stimulus and of course a day of real reckoning will hit, but that's in the future. I would consider shifting some of that ‘cash’ in your 401K into a more growth oriented fund investment. We continue to lean long into this rally and it's going well so far. Let's keep our fingers crossed for more.

The Market:

Up, up and away… yes it’s a Superman market lately that shrugs off bad news like Superman shrugged off bullets. This week showed that J.Q. Public is putting his toes back in the water for the first time in almost a year. Last year J.Q. Public pulled over $39 Billion out of mutual funds, and this week $11 Billion came roaring back into them. It's not a record by any means, but it's a pretty big chunk of change. So why is everyone so optimistic? Well, there comes a time when people think they've weathered the worst: housing collapse, Lehman’s collapse, bailouts, rounds of stimulus, and horrible unemployment. They witnessed America's credit rating get cut for the first time in history. They remember August, 2011 when the market would drop 500 points on words out of Europe, and then gain 400 back, only to lose 300 the next day. J.Q. Public feels like he’s been through it all – and he’s still standing!

But J.Q. Public’s $11 Billion isn't why the market is moving higher. It's moving higher because there's a growing chorus of people expecting The Ben Bernanke to let loose another round of stimulus. I've been saying for quite some time that the next ‘round’ is on its way. This week, if indeed he does mention that more stimulus is coming, fund managers will plow into the market because they remember the market going up 6,000 points on QE1, and another 2,000 on QE2. So if this stimulus would be $1 Trillion, we could see another 2,000-point gain or more.

Now, if The Ben Bernanke and this week’s FOMC meeting produce nothing, and there's no News Conference – then I suggest this market will go down. So that's the deal, this market is rising in anticipation of more Federal Reserve stimulus. If we get it, we could see a very powerful rally that takes us into the fall. I think we will because The Ben Bernanke needs Obama, and Obama needs a rising market in order to get re-elected. It's pretty much assured that it's coming.

With additional stimulus, along with stocks rising, gold and silver will also increase as they are the anti-fiat money and will guard against the inflation that will eat into your dollars. Materials generally do well in a stimulus inspired market run. Last year some of our biggest swing trades were names like UYM. We bought UYM for around $30 and sold it 8 months later for $52 dollars. CLF and ANR did phenomenally well for us as well. We'll be looking at those and quite a few others that aren't so widely tracked going forward.

A reader had a question concerning how I arrive at my ‘Twitter’ posts each day. Every day I scan for particular set ups. I’m looking for stocks with a "reason" to go up, nearing a resistance level, and we have a flat to rising market. When I find some, I post them on Twitter (handle taylorpamm) with their corresponding ‘buy-in’ prices. I normally post them each morning, and if some get up and over their ‘buy-in’ prices – I take them. And then thru this Sunday letter you’ll see what’s remaining in my active portfolio, and the ‘stops’ that I have set for those ones that I am still holding. Lately – if something dips below the price that I paid for it – I normally sell it. Now, because not every stock gets over my ‘buy-in’ price that day I’m forced to keep a running list of some of the old ones that I’ve recommended as well (dating back a couple weeks). I continue to put up new ones as they develop, yet the old one's are still "relevant". For example: on December 11th, I mentioned that a move on CCJ over $19.65 was buyable. Well, it didn’t get over that mark for several weeks – but it’s now sitting at $23.50. What I do is take these ‘radar ideas’ that I tweet about – and load them into my stock trading ‘alert’ system. I let the ‘trading software’ alert me that one of these is getting close to the buy in area – and then I decide whether to pull the trigger.

DS writes in with a tip on BroadVision – BVSN – a stock that he purchased for $8.31 on December 12th, and is now at $27.05 – clearing the latest technical resistance level. It’s clearly on a rocket-ship – nice call DS!

As you’ve seen – we’ve been very true to sticking to our stops and just moving on to another stock. We’ll continue that philosophy especially next week.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, January 15, 2012

What if our debts were so great – that we just printed all the money that everyone wanted and handed it out to everyone? The European Central Bank (ECB), (fresh graduates of the “Best Crooks that ever Wore a Suit School”) have taken their marching orders from Professors Timmy Turbo Tax Geithner, and Ben Helicopter Bernanke. They have point-by-point instruction via Mario Draghi (the X-Goldman associate) on how to print money ‘forever’ and hand it out to the banks. In lockstep, the individual European banks have gone to the ECB for a handout. The ECB is lending its member banks 3-year money at 0.75% (which they actually borrowed from our Federal Reserve). Where'd the Fed get it - thin air – just printed it! The ECB (with help from the International Monetary Fund) doles it out and we all party like it's 1999!

In years gone by, had the Federal Reserve done what they’re doing now – the investing world would have vapor locked, the markets would have crashed, corporate bonds would be paying 30% yields, and economic life (as we know it) would have come to a halt. But that was the ‘old days’, and it’s lucky for us that these new geniuses have it all figured out. According to them, we can print forever, debts don't matter, and there's economic bliss for everyone. The problem however is that this ‘really’ cannot last.

Does The Ben Bernanke and the boys ‘really’ think they're genius for discovering that if you print money out of thin air, you can perpetuate economic growth? Sorry that’s been done a thousand times. The only thing The Ben Bernanke has going for him is that because our money is now digital, he can press 9 buttons and create an instant one trillion dollar loan to the Treasury. But the problem is that this has never worked. Not for the Greeks, Romans, Thessalonians, Hasmoneans, Herodians, Weimar Germans, Zimbabweans and any other "ians" you can name. In each and every incident of money manipulation and abuse of the currency, the end result was first inflation, and then crushing deflation.

But, the time frame is what we need to put into perspective. While a small country like Zimbabwe can experience hyperinflation that will stagger your mind in just a couple years (my son actually has a genuine Ten trillion dollar Zimbabwe bill sitting on his desk), when dealing with larger civilizations, it takes decades for them to completely ruin themselves. The clock has been ticking since 1971 for the U.S. (when we went off the gold standard). We have put 40 years under our belt using a completely fiat currency. Since the US has been the single biggest economy of all time – it takes a long time to completely screw it up. We're going into year 4 since the Lehman blown up – yet where are we? Unemployment is rampant, housing still falling, and now Europe is blowing up. This is a slow motion train wreck, whose life expectancy is extended by The Ben Bernanke bucks. Rest assured, we will not break the most basic of economic rules. There has never been a "fiat" currency that has survived. The only other choice is just to pull the pin, let all the defaults happen, watch everything crash and start from scratch. That route won’t happen for two reasons: (a) it's very painful when it's happening and even the vaunted bankers who are in bed with the Feds and Politicians would have to crash and burn, and (b) there are never any guarantees that the people in power at the start of a wicked crash and burn are still in power on the rebound.

We all know that the Euro zone is in danger of breaking up. Greece is still destined to fail. They are going to run that digital printing press as fast and hard as it's processor will allow. For those of you who may think that gold and silver have already had their best days, you should reconsider that thinking.

Consider this, when I predicted that we’d invade Iraq – my reason was simple economics. Saddam was tired of the US dollar falling like a rock against the Euro, so he decided to change his central bank holdings from dollars to Euro's. He even said that he'd rather have Euro-states pay for his oil in Euro's. That right there sealed his fate. I stated at the time, that there was NO WAY the US was going to let petrol sell for anything but dollars. The fact is, the dollar is "backed" (if you will) by oil. We made a deal many years back with the Saudi's that we'd keep our oil off the market if they only sold oil in US dollars. It was the grandest "wink - nod" agreement ever. So, when Saddam went rogue his days were numbered.

Well back in December, Iran made a pact with Russia. When the US slapped the embargos on Iran, they said "Okay, we're going to talk to the other big dog on the street" and that was Russia. What they did, was agree to trade Iran Oil for Russian rubles. This is a massive slap in the face to the US, because we can't just go in and blow them up over not wanting to use dollars for oil any more, because they have Russian backing now. If you had any doubts about going to war with Iraq, erase them. We've been provoking them with everything we have, hoping they'll fire the first shot. Instead they did an end around, and buddied up with Russia. So you can bet the rhetoric against Iran will explode, and at some point, we'll be "going in". When it happens, be prepared for the 50+ dollar oil spike and gold will rise a bit on the "tension" side of things.

But how about the lies we were told less than 60 days ago: “Black Friday was the best in 10 years!” And now we find out that the retail numbers stink, company after company is lowering guidance, chipmakers say there's a global slowdown on everything from smart phones to Televisions, Jim Cramer has called a bottom in housing 4 times in 3 years – yet last week we learned applications to buy again fell like a rock. Oh, and one more item – of course QE3 is coming. In many ways it's already come, as there is absolutely no charter that states that our Fed can bail out Europe, but they just did. Likewise, because our numbers here in the states are just manufactured lies, another round of stimulus is coming. Just this past week they let 3 members of the Fed board run around the country suggesting they wouldn't be against more stimulus spending and more purchases of assets. I wouldn't be surprised at all if The Ben Bernanke comes out later in January and announces himself that they are working up the new plan.

The Market: We are definitely "in January Effect" mode, but it’s going to be herky-jerky and fraught with pull downs as European news crosses the wires. Same shirt, different day. But right now – it is a proverbial day-trader’s market. For example: on Thursday, we had 8 open positions that we had initiated on various days since the start of the year. As they'd rise, we'd sell half positions, and let the other half ride. So, coming into Thursday these 8 were doing really well for us. Then the news hits on Friday am BEFORE THE OPEN of the market that S&P was going to downgrade a slew of European debt. Boom, our stocks fell like rocks – before the open – so there’s literally nothing you can do about it. Now, when the market was falling on that Euro news, was there any proof that it wouldn't be a 300-point down day? So as the market was falling 80 to 120 points, do you hold your short-term stuff, and "hope" this isn't the "big one" and you're going to lose all your profits? Don't let anyone ever tell you that you can look at a chart and know the answer – because you can’t! So you have to use your best judgment and risk management. We sold some half positions on really strong stuff, and held anything that didn't violate our stops – which were all set for “at entry” or higher.

I think that this current rally has more legs, but ONLY for a couple reasons. A lot of fund managers didn't make big numbers last year. In fact, almost 80% didn't do as well as the indexes themselves, so they are desperate for a good quarter, even if it's only one. Secondly, there's no question that with The Ben Bernanke's goons talking about more stimulus, we are probably getting close to QE3 here in the states. (Granted I guess it should be called QE4 because QE3 is the "interest rate twist" game they've put in place to get longer-term rates lower.) Thirdly, if a Republican takes the office, you know that The Ben Bernanke's days are numbered. Thus, he better do what ever it takes to put lipstick on this pig and keep the market up, because without Obama in the Whitehouse, The Ben Bernanke is going back to teaching perverted economic theory.

Depending on the size of QE3, it could propel the market up for a few weeks to several months, but it’s a fake rally. Just like QE1 took us from 6.6K to 12K, and then we faded. So did QE2 took us from 11k to almost 14K, and then we faded. Now that the interest rate twist isn't provoking more home buying, The Ben Bernanke is going to do QE3, and if it's big, we'll see all new market highs this year, before the wheels fall off. If QE3 is not big enough, we'll pop and drop, and likely trade sideways.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, January 8, 2012

The market did something very interesting on Friday; it failed to respond to a mindless jobs report by roaring higher. That speaks volumes of what the investing public is doing. In terms of the numbers released this week:- Friday’s jobs report said that 200,000 jobs were created in December, and I’m sure J. Q. Public said – ‘Wow, maybe my kids (or me) can find a job.’ Not so fast, because short-term delivery drivers and extra help at retailers accounted for 45k of those jobs. And subtracting off other seasonal variations - Trim Tabs reported that the jobs created number was actually 38k and not 200k. - Thursday’s ADP ‘Unemployment’ report came in as a seasonally adjusted to 376k new unemployment claims files – but also the non-seasonally adjusted number was actually 525k (ugh)!

The interesting part of both of these reports is that Wall Street behaved rationally. That means that we’re going to need ‘spectacular’ news in order to move this market higher – because the real facts are beginning to get in the way of ‘fantasy’ – even on Wall Street. Some real facts from this week:- American Eagle Outfitters - the teen apparel retailer – cut its Q4 guidance, - HTC – the mobile phone maker – will cut its Q1 chip orders by 20% blaming slowing global demand for high-end smartphones, - Nucor - a steel maker - announced that it was closing Nuconsteel due to faltering returns, and - J.C. Penney and Gap slashed their Q4 outlook.

With real un-employment running around 15%, and under-employment running around 40% - I took a few minutes this morning to look at the job listings in Pittsburgh, PA. The results are potentially not shocking, but they are indeed depressing. I remember my old friends being hired (right out of high-school, no experience, 30 years ago) in my old hometown, for a manufacturing position – for $15 per hour. Within a couple of years they were making $21 per hour. In this morning’s paper there is an “Engineering Assistant” job listing:- Requirements: Bachelors degree in Engineering- Duties include: Complete familiarity with implementing process control techniques and procedures into manufacturing environments. Analyzing manufacturing process flows continually for the enhancements of quality, cost reduction, and throughput…- Salary Range: $28,000 / Year

So 30 years ago a person could start with 0 experience for $29,640 / year, and today with a college degree, and experience that person is starting at $28,000 / year. And 30 years ago a Ford F150 cost $8,383, and today it costs upwards of $22,000. So prices on Ford F150’s have gone up 175% - while wages have gone down.

The bottom line of this particular rant is that in order for the markets to go higher this year (and potentially President Obama to be re-elected), we’re going to need to hear "better" news on all fronts. Therefore, please make your financial decisions by digging below the surface, do your own research, and stay safe.

The Market:Between insider trading, the plunge patrol team, high frequency trading, dark pools, criminal Federal Reserve heads – I really sympathize with anyone trying to predict this market. Therefore when I saw the jobs numbers on Friday, I really did expect everyone to buy the market. Remember, on Jan 3, we closed the DOW right at 12,400 – the next trading day we closed at 12,418 – and the following day we closed at 12,415. That looks very much like a consolidation, ahead of the important (to be released) jobs number. Yet Friday, instead of using those numbers as a base to press higher, the market sagged and closed at 12,359. I don't think we can explain it away as a European problem, or not wanting to hold over the weekend – I think the market just ran out of gas – a.k.a. the buyers just didn't show up.

So does this mean that the “January Effect” is over? We still see some stocks making good chart patterns and pressing higher, but the fact is if the market (as a whole) rolls over, individual stocks will rarely be able to hold up on their own merits. Just like a rising tide lifts all boats, an ebb tide puts them all in the mud. This week we’ve seen stocks that run higher for a dollar, two, maybe three and then "bang" all the way down to where we bought them. So we are going to change our trading philosophy slightly. What we are doing now is going into a stock ‘fairly heavily’ and then selling ‘half-positions’ as it makes a decent gain – and then we exit the entire purchase where we bought it (if the stock drops to that point). We accomplish all of this electronically – naturally.

Now in the case of Gold and Silver, things are equally as bazaar. 80% more silver was purchased the first week of January 2012 than was purchased in January 2011. Now, how can demand for something rise 80% in a year, and yet the price not move up accordingly? It's easy, just ask J. P. Morgan. On Wednesday, the CFTC is going to hold a meeting to determine and clarify 3 rules in regards to “swap” trading (the type of trading in which J.P. Morgan specializes). But wait, the committee has decided that they first need to determine the meaning of "swap". So, they're going to hold a meeting to clarify such things as "Business conduct standards for swap dealers" this coming week, and then they will define the term "swap" in February.

The Gold pits are equally bazaar. Some central banks are clamoring to buy more, while others have sold some to raise desperately needed cash. In Asia, and in Europe, the amount of people buying gold is making new record highs every quarter. But the price is still depressed – why? By calling up your physical gold dealer you’ll find that they have very limited, shippable quantities on any significant buy order. You’ll find that the ability and price to obtain the physical product is indeed growing – which is good news for investors because at some point, imbalances do come to an end. I don't know when, but I think we're getting close. Currently there is tremendous pressure on the SEC and the CFTC to finally come clean and give us back a market that people can trust. They’re taking a long time so that the criminal banks (JPM) can cover their shorts and get properly in the shadows. But I do believe “swaps” and position limits will be defined, and at that time the silver market (in particular) will rise substantially.

I’m still leaning long but there’s no guarantee, so be careful out there. We are no more stable in January, than we were during the fall, so wicked 300-point days could become the norm again. Hold tight, its all going to be jolly fun!

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Sunday, January 1, 2012

Today’s world is so vastly different from just a couple years ago – “This ain’t your father’s market anymore.” Right now, even the most disinterested of economic followers would tell you that Europe seems to be the big problem. But why is Europe in so much debt? It’s because they implemented socialist programs, that were never financially supported. When I was younger I remember seeing a nice car and saying: “I need to learn what to do, so that I can drive that type of car.” Never did I say: "Boy those people shouldn't have such nice things, they should sell all that and give the money to everyone else". I’m wondering - has the American “dream” become the American “entitlement” state?

Remember those ‘Occupy Wall Street’ (OWS) protestors – and their ‘transformational’ placard: “Everything for Everybody.” Well somewhere along the line some basic concepts were missed – and I’d like to thank one of our readers for reminding me of them: #1 Life isn't fair. The concept of justice - that everyone should be treated fairly - is a worthy and worthwhile moral imperative, but justice and economic equality are not the same. Or, as Mick Jagger said, "You can't always get what you want." No matter how you try to "level the playing field," some people have better luck, skills, talents or connections that land them in better places. Some also seem to have all the advantages in life but squander them. And others play the modest hand they're dealt and make up the difference in hard work and perseverance. Is it fair – that’s a stupid question?#2 Nothing is "Free." Protesting with signs that seek "Free" college degrees and "Free" health care make protestors look like idiots, because colleges and hospitals don't operate on rainbows and sunshine. The 53 percent of taxpaying Americans owe you neither a college degree nor an annual physical. There are other things that are not free: overtime for workers, trash hauling, repairs to property, and the food that magically appears on tables. Real people with real jobs earning real dollars are underwriting the OWS temper tantrum. #3 Your word is your bond. When I see demonstrators advocating eliminating student loans debts, I wonder if they realize that they are advocating precisely the lack of integrity that they decry in others. Loans are made based on solemn promises to repay them. No one forces you to borrow money; you are free to choose educational pursuits that don't require loans, or to seek technical or vocational training that allows you to support yourself and your ongoing educational goals. Also (for the record) being a college student is not a state of victimization. It's a privilege that billions of young people around the globe would die for - literally.#4 A protest is NOT a party. The issue with OWS protestors is that it’s clear – most are doing it for attention and fun. Serious people in a sober pursuit of social and political change don't dance jigs down streets. Please understand your actions cause your pursuit (as noble as it may be) is being viewed as irrelevant to all that are seeing you.#5 Finally – there are reasons you haven’t found jobs! The truth? Your tattooed necks, gauged ears, facial piercings and dirty dreadlocks are scary and off-putting. Nonconformity for the sake of nonconformity isn't a virtue. Occupy Reality: Only 4 percent of college graduates are out of work! And if you are among that 4 percent, find a mirror and face the problem. It's not them – It’s YOU!

Now consider what's happening in Europe right now as things have disintegrated to the point of no return. The current push is for all the countries involved - to give up their sovereign rights, and hand them over to a group of technocrats in Brussels. These technocrats will then tell the countries what budgets they can run, and how to form their economic policy. Can that be any clearer? The countries actually will need to give up control of themselves – so that a ‘new world order’ could govern them appropriately – Really?

I remember in 1966 Alan Greenspan writing: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

So, we look back on 2011 and see things never seen in history. - The Manipulation of Markets. Everyone from Jimmy Rogers to Marc Faber has declared that we do NOT have free markets. As MF Global literally ‘looses’ people’s money – John Corsine (the CEO) serves no jail time. - We’ve had volatility this year, as never seen before. We had 40 - 90% days this year. That means that there were 40 days when 90% of all the trades and all the volume was to one side, whether up or down. Now from 1996 to 2006, there were only 28 of those sorts of days total - about 3 a year. In 2011 we had 40 such days!

OK in 2012 we know that the world’s economies are on the ropes, and there are only TWO ways out: - Outright default, where everyone just writes off their debts, the economies implode for a period, and then everyone rebuilds from the ashes. Now once everyone defaults, the first thing to do is to print money in order to rebuild.- Secondly, the economies can print money as fast as they can in order to paper over the troubles, and put off the pain of default. That always brings the inflation problem. - The bottom line is that in either situation, whether they print now, or print after default, a "whole lot of money" is going to be created.

2012 is set to go down as one of the most fascinating years in American history. We have an election and our own fiscal nightmare to take care of. Will the billions that our Fed printed and sent to Europe stave off the liquidity problem at the banking level? After all our FED gave 523 banks over half a trillion dollars at basically 1%. These same banks can take that money and buy Italian bonds paying 7%. Italy will then benefit because they won't have to default. The bankers will benefit by getting 6% for "free", and if they leverage that and loan it out, they could light an economic fire. The question is: Will the bankers loan out the money – that is the big question?

The MarketSo in 2012 if you can't just park your money in the market, where can it go? Housing? Nope - as much as they've called a bottom in housing about 30 times, housing continues to fall, and foreclosures still mount. In our world, the only thing that still makes sense is short term trading the market, and buying physical gold and silver.

Now I know that many of you are upset over gold’s plunge. At the beginning of 2011 we said that gold would go from $1,200 to $1,600 per ounce – and we got very close at $1,560. But the interesting part of this story is that currently there is a disconnect between the price of the traded element, and the price of the physical element itself. In fact, many places won't honor the spot price of gold, because the physical metal is selling for much more than the paper. Remember, there has never been a time in the world’s existence that the price of gold EVER went to zero – you can’t say that about any other fiat currency!

The stock market itself (as you all know) doesn’t belong at these levels, yet it could go higher with all this funny money. Then again if we cause a war in Iran that pushes oil over $200 per barrel – then we could easily see the DOW at sub 8k levels overnight. But one thing is certain, and that is you can't just "set it and forget it". - You have to trade this market, or be out of it. - This year we are going to see more volatility, and more insanity. - If you can't be nimble, you'd be better off staying away.

In the short term, we are now in January, and "often" we get the January effect. This is when fund managers get their "new year pension money" and plough it into the market. Usually they focus on two places:- They put a lot in the stocks that worked well in the year before,- And they put "some" in stocks that have been clobbered to death, looking for a strong rebound.

Will we see a January effect – we should but it’s not written in stone. Even though this year brings major challenges, let me wish you a great new year. Don't forget gold and silver. Yes they're down – they’re supposed to be down, and they'll be back. Keep an eye on your personal safety, and remain aware of your surroundings. Crime is on the rise and will continue in that direction.

Disclaimer:Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, RF Culbertson, contributing sources and those he interviews. You can learn more and get your free subscription by visiting: .

Please write to to inform me of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference .

If you'd like to view RF's actual stock trades - and see more of my thoughts - please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on “Fearless Investing”:

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

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